From 1 May, newly-qualifieds will be paid £42,000 compared to the current rate of £35,000.

The move follows Clifford Chance's decision to increase its rate of pay for newly-qualifieds to £42,000, which followed SJ Berwin's decision to increase its rate for lawyers in the same range.

Ashursts human resources manager Stuart Walker says that the decision to increase levels of pay follows the current market rate set by Clifford Chance.

“Clearly there is a market rate for salaries and Ashursts pay at the quality rate,” he says.

City giant Allen & Overy is also following Clifford Chance's example by upping pay for its newly-qualified lawyers to £42,000.

But it is unclear how Ashursts will finance the increase as partners at Ashursts made £425,000 last year, while Clifford Chance's profits per partner in 1999 reached £605,000 and Allen & Overy's partners reaped £595,000.

Although the current market rate has influenced Ashursts' move, one source says that the potential merger with US giant Latham & Watkins may be a contributing factor (The Lawyer, 7 February).

He says: “It is quite unusual for Ashursts to pay at a rate on the same level as Clifford Chance and SJ Berwin which pay at a very competitive rate against US firms.

“Maybe it is trying to get its pay to a level where it is on a level playing field with a US firm.”